CNN hardware has demand for 1400 wrenches each year. The cost of a wrench to CNN is $400. The cost to carry inventory is estimated to be 0.20 of the unit cost, while the cost to place an order is $25. If the owner orders in quantities of greater than 300, he can pay 95% of the original cost per wrench. CNN is now concerned as they run out of stock too often. Having reviewed the inventory policy, CNN management found that the lead time for the wrenches is 310 days with a standard deviation of 40 wrenches. Management decided on a 95% service probability for the wrenches.

1. How many wrenches should be carried as safety stock?

2. What is the appropriate reorder point?